Publications by Topic
Topic: Economic Growth and Dynamic Scoring
Dynamic Scoring: Not so Fast! (Commentary)
Author(s):
Rudolph G. Penner
Using dynamic scoring to weigh the effects of tax and spending proposals poses a high risk that ideological biases will pollute the analysis, senior fellow Rudolph Penner warns in a Ripon Forum commentary. The former director of the Congressional Budget Office also points out that consistent dynamic scoring is logistically impossible given current technology.
Published: 04/21/06
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Bush Administration Tax Policy: Introduction and Background (Article/Tax Break)
Author(s):
William G. Gale , Peter Orszag
This paper is the first of a series that summarizes and analyzes these policies and proposals. The series has two broad goals: to describe, interpret, and assess what has happened; and to examine the consequences of making the tax cuts permanent. This paper provides background information intended to help frame the issues analyzed in subsequent papers. Those papers will examine the distributional effects; tax cuts and fiscal policy; the effects on long-term growth; the effects as a short-term stimulus; the effects on government spending; and the extent to which the tax cuts serve as an effective prelude to fundamental tax reform.
Published: 09/13/04
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Economic Effects of Making the 2001 and 2003 Tax Cuts Permanent (Research Report)
Author(s):
William G. Gale , Peter Orszag
All of the provisions of the landmark tax cuts enacted in 2001 and 2003 are scheduled to expire by the end of 2010. This paper analyzes the economic effects of making the tax cuts permanent. We describe the recent tax cuts and the proposals to make them permanent, and explore the consequences of making the tax cuts permanent with regard to the fiscal status of the government, the distribution of after-tax income, and prospects for long-term economic growth. [© Brookings Institution]
Published: 08/01/04
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The 'No New Taxes' Pledge (Article/Tax Break)
Author(s):
William G. Gale , Brennan Kelly
This article examines the "no new taxes" pledge that has been signed by President Bush and 258 members of Congress. Although it is intended to restrict the size of government, the authors believe that the pledge probably hinders rather than helps efforts to restore fiscal responsibility. Evidence from trends in aggregate taxes and spending, the success or failure of budget rules, and the voting records of pledge signers casts doubt, the authors assert, on the view that signing the pledge is an effective effort to "starve the beast" or an act of fiscal responsibility. If all of the signers uphold the pledge, it will prove impossible to repeal any part of the 2001, 2002, and 2003 tax cuts before President Bush leaves office, though the legislation could expire as scheduled even if all the signers supported extension, they find. The authors also think that the pledge may also have implications for appropriate budget scoring rules.
Published: 07/12/04
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The President's FY2005 Budget: First Impressions (Commentary)
Author(s):
Peter Orszag , William G. Gale
On February 2, the Bush Administration released its budget proposals for fiscal years 2005-2009. This paper provides initial analysis of the Budget. [© Brookings Institution]
Published: 02/04/04
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The Budget Outlook: Baseline and Adjusted Projections (Article/Tax Break)
Author(s):
William G. Gale , Peter Orszag
The CBO's new budget update provides the opportunity to reassess fiscal prospects and reconsider policy options. This paper examines the baseline CBO projections and adjusts the official data in ways that we believe more accurately reflect the current trajectory of tax and spending policies and the government's underlying financial status. Although the CBO baseline projects unified deficits that average 1 percent of GDP and shrink over the next decade, realistic assumptions about current policy imply persistent deficits of in excess of 3 percent of GDP in the unified budget and in excess of 5 percent of GDP exclusive of retirement trust funds. All budget projections deterioriate sharply and permanently after the current decade ends.
Published: 09/22/03
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The Economic Effects of Long-Term Fiscal Discipline (Discussion Papers/Tax Policy Center)
Author(s):
William G. Gale , Peter Orszag
This paper examines long-term fiscal discipline and economic performance, with two main results. First, declines in budget surpluses (increases in deficits) reduce national saving and therefore reduce future national income, regardless of their effect on interest rates. Second,
increases in expected future deficits raise long-term interest rates. Thus, the costs of long-term deficits are significant and need to be compared carefully to the potential benefits of tax and spending changes that increase deficits.
Published: 04/24/03
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Making the Right Case for Dynamic Analysis (Article/Economic Perspective)
Author(s):
C. Eugene Steuerle
A recent Congressional Budget Office report presented many estimates, both positive and negative, for the effect of the president’s proposed tax cut on the economy. In issuing this report, CBO indirectly called into question many of the more naïve statements made about the ability of Congress to "dynamically" score tax cuts in a way that significantly lowered their budget cost. However, there is a good case for dynamic analysis, which is that raising taxes (and spending money) causes distortions which generally cost taxpayers more than what is reported in the budget. The burden of proof for government action, therefore, lays with the advocates for that action. There should be gains to taxpayers from spending programs that offset the additional costs associated with taxation.
Published: 04/21/03
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